Charles Triano

Pfizer Inc. (PFE)

“I’m a Surveillance guy from many years past and I understand there are limits to “market intelligence.” What prompted us to add Market Structure Analytics in the Pfizer IR department is the focus on behaviors in addition to “who’s buying and selling?” We want to track market activity the way institutions actually behave today. Buy-and-hold money buys and holds, and traders trade and asset-allocators continually shift and rebalance, and everybody hedges. Market Structure Analytics reflect these realities and help us consistently monitor the effects of all these factors in our market on a timely and affordable basis.”

Lisa Defrancesco

ALLERGAN (AGN)

The analysis that we receive from Modern IR provides a unique perspective on the trading of our shares. We’ve experienced a lot of activity over the past couple of years and I find the analysis very useful and quite accurate as to the forward trends. They also offer consistent high levels of service which makes it easy to ask questions and get the answers you need in real time.

Kate Scolnick

Seagate Technology PLC (STX)

“I’ve used ModernIR’s market-structure analytics at EMC, McAfee/Intel and now Seagate. Knowing what forces are behind my price and volume and what that tells me about our messaging, the overall health of our equity, and what I should expect next, is indispensable. I think it’s essential that IR professionals develop a core understanding of market structure today. It’s just reality.”

Heather Rowe

FIVE PRIME THERAPEUTICS (FPRX)

While at my previous company, KYTHERA Biopharmaceuticals, we brought in the ModernIR team to help provide their unique insights on our trading. They were able to consistently parse through a huge amount of trading data to give us high-quality answers regarding the shifting demographics of our equity marketplace, even through the process of our acquisition by Allergan. Possessing that sort of information, we knew in almost real-time exactly how investors and arbitragers were responding. To me, that kind of information is invaluable… so much so that I brought ModernIR with me to my new company. Moreover, beyond their data analytics, ModernIR consistently provides a high-touch, customer friendly service that is invaluable in not only providing quantitative data, but also qualitative insights that help us connect the dots on what’s really going on. Their grasp of market structure and their ability to translate these insights into actionable recommendations make them a trusted and valuable resource.

Pete Crowe

RE/MAX (RMAX)

Modern IR provides an excellent quantitative view of the different types of trading in our stock; it’s helpful to see where the money is coming from and what type of investors are driving our stock movements. The gauge on rational price is critical to understand how thoughtful investors are viewing the value of our company, and what steps we as IR professionals need to take in order to increase or improve the perception with certain investors.

Tvrtko Jarnjak

WHIRLPOOL (WHR)

We found ModernIR insight into trading and market structure to be very valuable in our stock surveillance efforts. Our stock tends to be very volatile and ModernIR brought a much better view into quant-driven trading in addition to more traditional active investor tracking. The team is responsive to ad hoc requests and we leverage their analysis in quarterly management updates. Well worth the subscription!

Leslie Kratcoski

SNAP-ON (SNA)

Recently, I gave a presentation to our leadership team (about two hundred managers). The general theme was “Equity Markets.” I discussed the dramatic changes that markets have undergone the past 15-20 years, the behaviors behind our price and volume, and the reasons that IR remains an important function given the unprecedented levels of competition for mind share in today’s markets. The presentation was very well received. Several attendees commented to me about how much they learned, particularly about the gap that existed between their perception of the markets and reality. This success wouldn’t have been possible without our partnership with ModernIR overall and your assistance in preparation for the presentation specifically. Thank you very much!

Linae Golla

TENNECO (TEN)

Markets have changed dramatically over the past decade or so. At Tenneco, we believe that investor relations needs to evolve to keep pace. But how is that possible when equity trading is dominated by derivatives activity and high frequency trading? Our answer is ModernIR. Using Market Structure Analytics, the team at ModernIR is able to analyze our trading activity and provide a timely assessment of the behaviors behind our price action. We know in short order whether a price movement was in fact driven by active investors, or whether our shares were pulled along by indexer activity or were caught up in a trading scheme. That, in turn, gives us insight into one of the most elusive IR metrics … investors’ view on fair value.

Raj Mehan

Steelcase (SCS)

“I first considered Market Structure Analytics because I felt that I was sharing incomplete and only surface level analytics with the Board and senior management regarding the trading behavior of our stock. Market Structure Analytics has been instrumental in helping evolve internal perceptions of how the market works and how we should think about the ‘market price of the stock’ and the ‘rational price’. We now incorporate behavioral views of market activity into our quarterly Board reports, providing a better context for fair value. We also consistently monitor active and passive investment behaviors and how speculative trading and perceptions of risk can have significant impact on stock-value. The result is a better informed Board and management team on our stock’s health and drivers. The entire team at ModernIR is knowledgeable, well-connected and always responsive. Having them as a back-stop gives me increased confidence in understanding the capital markets and our stock’s trading behavior.”

Colby Brown

H&R Block (HRB)

“ModernIR is a tremendous help to us in sorting through the noise in the market to understand what’s really happening. During the four years we’ve worked with ModernIR, we’ve encountered several challenges as an IR team, including management turnover, sale of subsidiaries, and repositioning the investment thesis. With each challenge, ModernIR helped us understand the market’s response in proper context — not just how thoughtful investment dollars react, but how speculators and high-frequency traders are influencing our valuation. We know how to adjust our focus based on what behaviors are dominating our trading activity.”

Seth Mrozek

Ashland Inc. (ASH)

“ModernIR’s analytics show when Active Investors step up to buy at a statistically significant level to set a new Rational Price. We find it valuable to watch how that drives share behavior afterwards. We have regular discussions with members of the Client Services team at ModernIR who help us draw conclusions from the data and tie it back to our investors. We highly recommend ModernIR’s services, especially for IROs who don’t have technical market experience or a trading background.”

Jay Wilson

Hess Corp (HES)

“I use Market Structure Analytics to track changes in how institutional investors manage risk or leverage positions with swaps and other forms of hedges, and to help me understand when passive investors – indexes and ETFs – are rotating into or out of Hess stock. These are parts of the demographic mix setting our stock price and by distinguishing them from fundamental investors, I have a better sense of fair value and can set realistic internal expectations of where our stock should be trading.”

Midcap Healthcare

IRO Midcap Healthcare Technology Company

“Modern IR has taken me on a journey of discovery into the complexities of trading today. The thoughtful analysis Tim Quast provides has opened my eyes to a world of knowledge that is increasingly important to possess as an IR practitioner. I now have a much better understanding of what’s substantive and what’s noise when it comes to my company’s trading activity. This allows me to offer more insight to my management team and to communicate more effectively with Wall Street.”

Jay Davis

Macquarie Infrastructure (MIC)

“ModernIR has helped distill large volumes of trading data into concise commentary on stock price performance for my Board and Management team, and actionable marketing ideas for me.”

John Kraft

ACI Worldwide (ACIW)

“Our IR and Management teams find that market structure analytics settles our nerves when shares are volatile and there’s no “logical” explanation. It also helps us connect the dots after investor outreach or conference participation because we can see whether our target audience is reacting to our story and if they are buying or selling. We didn’t know what we didn’t know about market rules and behavior before using market structure analytics, but now it has become very valuable to us. If we were in the unfortunate situation of having to cut budgets, of all the tools we use in our IR program, this would be one of the last we’d cut because we find it the most helpful. You may not know that you need it until you try it, but you will find ModernIR and the information they provide very valuable.”

Todd Shoot

Titan Intl (TWI)

“I believe a well-informed IRO should understand the valuable information embedded in stock trading activity. Understanding the underlying demographics that drive stock price movements has been a huge “a-ha moment” for our IR and management teams. Realizing that Active Investment is a rather small component of overall pricing is valuable insight. We receive weekly reports to consistently measure market behaviors and see how they change over time. ModernIR also helped us in the planning process as we are better able to determine next steps and what upcoming investor actions might be. With ModernIR, we are no longer operating in the dark. “

Mega Cap Industrials Co.

“With Market Structure Analytics, we now have a much deeper understanding of what is moving our shares and how investor uncertainty can impact trading. ModernIR has a great way to measure investor engagement. Both our IR team and management find that the Engagement indicator gives us a very good feel for where active investors are stepping in to buy and whether they understand our story. I highly recommend ModernIR as they offer insight that no one else can, they operate with honesty and integrity, and their services can be personalized to one’s unique situation.”

Matt Garvie

Tandem Diabetes (TNDM)

“ModernIR analyzes equity market activity from a demographic perspective, which makes their service unique compared to traditional Surveillance. Initially, we thought that might be a challenge for management who, in our experience, have been accustomed to thinking in terms of “who.” This actually wasn’t a challenge because management quickly saw how compelling it is to track all of the market behaviors that impact our share price rather than just Institutional Investors. Market Structure Analytics gives us accurate answers about share price moves, and an accurate look at where shares are likely headed because their answers are based on statistical analysis. We believe Market Structure Analytics is a necessary tool to help management understand what affects share price given today’s fragmented market and we also believe it is certainly the best value.”

Evren Kopelman

Ralph Lauren (RL)

“The team at ModernIR are good teachers. They offer classes to make it even easier to appreciate the wealth of information contained in each Market Structure Report, from investor “fair value,” to sentiment, to behavioral changes, to short volume, and much more. Market Structure Analytics has become a key resource for the IR team here at Ralph Lauren.”

Amy Wakeham

Integer Holdings (ITGR)

“I get weekly analysis, educational classes, calls with the Client Service team, and assistance in preparation for Board meetings. Our weekly Market Structure Report, which includes a summary of activity in our shares and changes in our key metrics, provides me with a good sense of the health of our share market and whether there are any issues to address. As our new CFO comes on board, I’m excited to share ModernIR’s data with him and demonstrate how IR can be used strategically and effectively. It’s a cost-effective way to look at trading data especially considering how the market has evolved. When you want to know what’s moving your shares, look to ModernIR.”

David Stickney

ARC Document Solutions (ARC)

“ModernIR provides real strategic value. We are a small-cap firm that can be subject to large intra-day price moves. Under a typical surveillance scenario, such price moves drive efforts to discover individual firms that are moving our shares — activity that is notoriously unreliable, and nearly always out of date. This kind of response creates a continuous, reactive cycle of behavior, rather than a strategic one. With Market Structure Analytics, we have a bigger, more real-time view of a market that often reflects trends in algorithmic, index, and ETF flows, or simply daily trading arbitrage. It provides a rationale for the behavior we’re seeing at any given time, and allows us to concentrate on strategic decision-making rather than stock price volatility. We strongly recommend ModernIR; their team is very well positioned to put your trading into context and free you to concentrate on big-picture items.”

Large cap Basic Materials Co.

“ModernIR provides valuable analytics that readily complement more traditional IR offerings as well as our own efforts. They employ statistical analysis to reach conclusions about trading activity and what that activity tells us about our equity. Specifically, Market Structure Analytics allows the team to differentiate between index fund flows or arbitrage and moves by active investors. The Engagement metric allows the team to inform management just how well our “story” is understood and appreciated by active investors.”

Chris Kutsor

Motorola Solutions (MSI)

“One of the first and best decisions I made when taking over as IRO was to hire ModernIR for their uniquely valuable trading analysis versus traditional stock surveillance. Their insights go far deeper than other options and proved exceptionally helpful in my understanding of our stock movement and in explaining changes to our C-suite. When my company became the target of a coordinated short-attack, ModernIR was able to track the daily short-trading and compare the trends, impact, and expectations versus other public short-attacks. Being able to educate my C-suite with hard data, historic trends, and insights into when it was ending was a tremendous value.”

Time for Change

Posted on August 9, 2017

Seventy-two years ago today, the United States dropped the second atomic weapon in four days, bringing world war in Asia to dramatic conclusion.

Current relations with North Korea demonstrate the intractability of human nature. While human nature is unchanging, markets are the opposite. Yesterday famed bond investor Jeff Gundlach of DoubleLine Capital declared that his highest conviction trade is a bear bet on the S&P 500 and a bull bet on a higher VIX.

The VIX, the fear gauge, reflects implied volatility in the S&P 500 calculated by the CBOE via options. Everyone is short volatility, Mr. Gundlach says. It can’t last he says.

Yet intraday volatility – the spread between average high and low prices during the trading day – has reached a staggering 2.9%. That’s 45% beyond the historical average of about 2%. How can intraday prices reflect savaging by arbitragers while the VIX, predicated on closing prices, signals a placid surface?

One word: Change. The market has been convulsed by it the past ten years.

Regulation National Market System in 2007 transformed the stock market into a foot race for average price. A year later, the global payments system heaved seismically. High-frequency trading arced like fireworks on the 4th of July.

For public companies, reporting duties that ramped with Reg FD in 2000 and soared with Sarbanes-Oxley in 2002, were drenched yet more with Dodd-Frank in 2010.

At the same time that companies were being compelled to provide ever more information, investors were shifting by the trillions to indexes and exchange-traded funds that ignore fundamentals. Now, Blackrock, Vanguard and State Street, largely deaf to story, are top ten holders of nearly every US equity.

For public companies it’s been like paying to cater a party for a hundred and having your mom and brother show up. Stuck transfixed, frozen in time from the summer of 1975, was Form 13F.

You didn’t know where I was headed, did you! Yesterday I had an earnest phone discussion with three professionals from the SEC (I’m leaking this information straight from the source, no anonymity required). They were good listeners and interlocutors, nice people, and genuinely interested folks.

The discussion happened because I’d earlier sent a note to new SEC Chair Jay Clayton saying there was no more urgent need in the equity market than the modernization of Form 13F. Within a week I heard from two different SEC groups. That says the new SEC chair cares about you, public companies.

I shared my written testimony (thank you, Joe Saluzzi at Themis Trading. None of us would be anywhere without you and Sal.) from the June House Financial Services Committee hearing, highlighting one thing:

It’s been 42 years since we updated disclosure standards for investors. This is not human nature we’re talking about, something timeless, changeless. It’s keeping up with the times – and we’re not. The SEC chair who gets these standards current with how markets work is an SEC chair who goes down in history for changing the world.

I said the same to the three SEC staffers. I said, “There is no greater goodwill gesture regulators could extend to companies, which have borne ever higher compliance costs for coming on 20 years now even as the ears of investors have gone deaf, than helping them know in timely fashion who owns, and shorts, shares.”

They said, “Investors will push back.”

I said, “Dodd-Frank orders disclosures of short positions monthly. It hasn’t yet been implemented, and we don’t know what Dodd-Frank will be in coming years. But one thing is clear: Congress thought monthly short disclosure was fine. Are we then to have long positions disclosed 45 days after quarter-end? That’s cognitively dissonant.”

They didn’t demur.

I said, “Companies fear you, you know that? You need to make it clear that you want them to engage. General counsels are loath to see their companies’ names in the same sentence as your acronym. You need to let them know you want to hear from them.”

They said, “We absolutely want to hear from companies.”

They think there’s merit to a stock market issuer advisory committee, another suggestion we offered Congress in June. This SEC edition wants to see business thrive. It’s the agenda.

Do we realize how great an opportunity for change is in front of us? It’s that big, public companies. You could know at last, after 42 long years, who owns your shares every month, and who is long or short. The world the way it is.

How to make it happen? Not us. We’re market structure experts. Not policy experts. You’ve got to get behind NIRI, our professional association.

I bet if a thousand companies asked the SEC to ask Congress to make 13Fs monthly…it would happen in the next two years. Maybe one.